In a graph of a typical firm's AFC, ATC, and AVC curves, the
A) AVC curve crosses the MC curve at the point where the MC is at its minimum.
B) distance between the ATC curve and the AVC curve equals the AFC.
C) AVC curve lies above the ATC curve.
D) ATC curve lies below the AFC curve.
E) distance between the AVC curve and the AFC curve equals the ATC.

Question

Quizplus · Accepted Answer

AFC is the vertical distance from the ATC curve to the horizontal axis (where quantity is zero). Similarly, AVC is the vertical distance from the MC curve to the horizontal axis. Therefore, the distance between the ATC and AVC curves equals the AFC curve.

In a Graph of a Typical Firm's AFC, ATC, and AVC